Penguins Gets $20 Million Loan
PITTSBURGH (AP) _ Over the objection of some creditors, the Pittsburgh Penguins were given permission Monday by a federal bankruptcy judge to borrow $20 million from a French bank.
The loan will allow the Penguins to meet their payroll on Tuesday and to remain in business until the start of the 1999-2000 season.
U.S. Bankruptcy Judge Bernard Markovitz agreed the Penguins could borrow the money from Societe Generale after the bank renegotiated terms of the loan. The team will pay 7 1/2 percent interest.
``This is a major step in the reorganization of the Pittsburgh Penguins,″ said Garvin Warden, the team’s interim chief executive officer. ``This should eliminate many of the questions we have been facing in recent weeks.
``Players and employees will continue to be paid. Bills will continue to be paid. Business is moving forward.″
Warden also said the team is close to announcing a new, more lucrative agreement with TV rights holder Fox Sports Pittsburgh.
The judge previously had a problem with a requirement that the team pay all legal fees and bank expenses related to the loan. Some creditors also objected, saying the Penguins needed only $12 million to $14 million _ not $20 million _ to operate through the 1998-99 season.
The creditors included Allstate, Principal and TMG life insurance companies and the Bank of America Trust and Savings Association, which argued the team is not worth enough to secure its debts.
The Penguins, who have an estimated worth of $75 million to $95 million, owe approximately $125 million in addition to the new $20 million loan.
Despite the mounting debt, Markovitz told the team on Friday that it could not borrow an additional $18.5 million from the NHL.